The year-round sunshine is just one of the appeals of buying a property in Thailand. But one thing that could be holding you back is the complexities of getting a mortgage for an overseas home. Where do you start? How do you apply? And where can you get support? This guide demystifies the process and explains what it takes to get a mortgage in Thailand as a foreigner.
Can UK residents get a mortgage in Thailand?
Yes, you can opt to take out a mortgage in Thailand or alternatively apply for a specialist overseas mortgage with an international lender. It’s worth noting that in both cases, the process will require more paperwork and checks to cater for the fact that you’ll be considered a higher risk.
To increase your chances of mortgage approval no matter the location of the lender, it’s best to seek expert help in the form of an experienced international mortgage broker.
Rules to be aware of
Before you start your property and mortgage search in Thailand, there are a few legalities to be aware of:
- While a foreigner can purchase 100% of a condominium or apartment, they can only have a maximum of 49% ownership in a house or villa. Any piece of land, including properties attached to land, like houses and villas, have to have a Thai citizen as a majority owner.
- If buying a condo, the number of foreign owners within the building cannot exceed 49% of the building’s total number of owners. This is something to check with your estate agent when looking at properties.
- An alternative to owning the entirety of a house, villa or land is to take out a 30-year lease, renewable up to three times. You would act as a guarantor and have ownership rights via what’s called a Chanote title (no.4) document.
- Alternatively you can create a Thai limited purchasing company to buy a house but this isn’t encouraged by the Thai government. The company would still have to have a Thai partner as the majority owner.
- If married to a Thai citizen, you can purchase a property but only act as a guarantor. The property would be in the name of the spouse.
For more information on the various rules and how they might affect your application, you can use our broker matching service to schedule a free consultation with an expert in Thai mortgages.
Speak to an expert in mortgages in Thailand
Maximise your chance of approval with a specialist in the Thai property market
Getting a mortgage with a local lender can be notoriously difficult because of the strict criteria they put in place. Most require that an applicant be over 20 years old, have between 15% and 30% of the property’s value (30% to 50% if in Bangkok) as a deposit and then either:
- Be married to a Thai citizen;
- Have worked in Thailand for over a year; or
- Have permanent residency.
Should you opt to apply for a mortgage with an international provider, they’ll also be conducting thorough checks to ensure you’ll meet the repayments. They’ll likely assess your affordability and the currency you earn an income in, your credit status and the length of time you’ve been a non-resident in the UK. They’ll also want to know how much you have as a deposit. This should be larger than 20% of the property’s value. Note that some lenders may not accept an income or credit score from overseas, so teaming up with a broker who can search for those who can definitely help would be a shrewd move.
How to get a mortgage in the Thailand
If you’d like to pursue a property purchase in Thailand, the first thing to do is:
Team up with a broker experienced in the Thai market.
There are lots of decisions to make when buying a property anywhere in the world, but particularly in Thailand. Some of those you’ll need to make at the start of the process and without prior knowledge of the mortgage market can make things seem tricky. A broker will provide bespoke advice that’ll save you a lot of time and, potentially, some money too.
Choose where you want to apply for a mortgage.
You need to consider whether you’ll get a better deal from a Thai mortgage provider or an international lender. A broker will be able to assess your circumstances and help you make that decision. Once you have a market in mind, your advisor can then work with you to choose a lender more likely to approve your application.
Prepare the paperwork.
Buying abroad requires additional application documentation such as copies of your visa, alien registration book or permanent residence book, more details on your income, overseas bank statements and a certified letter from your employer. Different lenders will have different requirements and it may be that you’ll have to have copies in both English and Thai.
A mortgage specialist matched to your specific needs can help you to begin working through these steps and limit any chance of miscommunication and delays. If you get in touch we can arrange for an advisor with experience in this area to contact you straight away.
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Which lenders offer Thai mortgages?
Lenders offering mortgages to foreigners in Thailand include UOB and ICBC Bank Thailand but both have their nuances. UOB, for example, will only loan in Singapore or US dollars while ICBC won’t lend on properties outside Bangkok, Pattaya or Phuket. There will also be stipulations as to whether you are working and where your income is coming from. Other lenders will loan to foreigners but only if they’re married to a Thai citizen.
Alternatively you can select a lender, like Chase or IMS Mortgages, that isn’t based in the UK or Thailand but specialises in international mortgages.
What interest rate to expect
The average interest rate in the UK, as of January 2023, is between 5% and 6%. Thailand mortgage rates, as an expat, will be higher than that at between 6% and 8% in order to mitigate the risks. It’s likely that international mortgage lenders will also offer a rate higher than what you might get if purchasing in the UK.
How much could you borrow?
In Thailand, you can expect to borrow between 40-80% of the property’s asking price with an average loan term of around 15 years. In the international market, different lenders will have different loan-to-value (LTV) ratios but you should plan to have saved at least 20% of the property’s value.
To work out how much you can afford as a loan, you can use our mortgage affordability calculator for expats. Simply enter your income to get a breakdown of the likely amounts lenders will offer. Of course, this doesn’t consider the location of your property so it’s best to verify this figure with an experienced broker.
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Property fees in Thailand
In addition to the property and mortgage costs, the other fees (a number of which are negotiable) you may incur include:
- Transfer registration fee: Usually about 2% of the property’s purchase price. It tends to be split between seller and buyer
- Business tax (Capital gains tax): Typically 3.3% of the property value, or the property’s highest appraised value
- Real estate agent fees: Some regions have such a structure. Places like Bangkok and Phuket - where real estate agents are free - agents are paid a commission by the landlords
- Legal fees: Negotiable but expect to pay between THB 20,000 -THB 30,000
- Withholding tax: this levy increases depending on how long you hold the property
- If you purchase property through a business, you may have business fees that are 33% of the cost. The Thai government relaxes this cost if you purchase condos.
Other things to know
To help make this process as seamless as possible it’s important to:
- Work with a local and trusted lawyer who can speak both languages, check the title deed of the land, building permit and developer company documents before you buy and ensure you have all the necessary documents post-sale.
- Get an inspection of the property before purchasing.
- Remember that the exchange rate will have a bearing on the final cost of your property and what you can afford.
Speak to a broker who specialises in Thai mortgages
Taxes and exchange rates, local legalities and international transfers; getting a mortgage in Thailand is not straightforward and carries many risks. The only way to avoid those and ensure a smooth process is to team up with a broker who understands your financial situation as well as the Thai mortgage market.
They’ll be able to sift through the nuances of buying abroad and ensure that wherever you opt to apply for a mortgage, you’ll have sound advice and a property in idyllic Thailand that won’t cost you more than it needs to.
To be matched with a Thai mortgage specialist today and enjoy a free consultation, call 0808 189 2301 or make an enquiry here.